Not all of our clients are new to accounts receivable financing. Many times, we work with clients who have a history with other factoring companies but have, for any number of reasons, struggled to secure the funding they need. This is one such story.
Eighteen months ago, Allied Affiliated Funding began working with a client who came to us following a negative experience with another factoring company. Our client’s previous factor would not extend credit on a customer the client had worked with for nearly a decade. In addition, the factor was unresponsive to the client’s communications and questions, continued to hold reserves from other invoice payments, and wouldn’t provide funding when needed.
In an effort to turn their company around and begin growing, the owners of this Texas printing company who had been in business for more than 50 years, sold assets and invested their personal assets into their business. Timing was everything, and funding was critical. The old factor simply was not meeting the needs of our client, all while creating uncertainty in our client’s relationships with their own customers.
Upon our initial engagement with the client, Allied took the time to understand the ins and outs of their billing process and their business to craft a custom financing structure to help maximize cash flow.
Allied Solves Financing Challenges with Fast Solutions
In their relationship with their previous factoring company, our client faced a number of challenges and frustrations that impacted customer relationships and their bottom line. Allied immediately got to work striving to understand these challenges and ultimately provide solutions to meet the company’s working capital needs.
Problem: Hard rules for delayed payments.
If an invoice hit 90 days, the prior factoring company charged the invoices back to the client’s cash reserves and stopped future funding on slow-paying customers without taking time to understand the reasons for delayed invoice payments. Right before the busiest time of the year for the printing company, the previous factoring company completely stopped funding their biggest customer.
Allied took the time to understand why some customers were slow to pay and provided a funding structure that gave this long-term, family-owned printing business the cash they needed, even on their slower paying invoices.
Problem: Poor communication created a strain on customer relationships.
The previous factor would send more legal or harsh notification letters to customers, instructing payments from the company’s customers be sent to the factor. These strongly worded letters incited concern from their customers about the client’s financial situation.
Allied’s notifications are typically customer-focused and sent on the company’s letterhead, demonstrating a working partnership with our clients and their customers.
Problem: Unreliable timing of funding.
Our client was working hard to make internal changes in order to turn their company around and become bankable again, but the timing of funding from the previous factoring company created a definite hurdle.
Allied provides reliable accounts receivable funding and overadvance lines during certain times of the year to help our client with growth needs or seasonally incurred expenses.
By funding with Allied Affiliated Funding, our client achieved sufficient cash flow to hire a CFO to help them create operational efficiencies and reporting and attained the working capital they needed to attract and win new business. The client currently holds a $1.5 million factoring line with Allied, receives 85 percent on their accounts receivable, and has access to overadvance lines when needed. In addition, Allied created a pricing structure that only charges the client for what they use, helping to maintain a lower cost of capital.
As a result of our relationship with this client, they are on the road to profitability today and plan to achieve bank financing later this year.
“We are extremely satisfied with the customer service we receive from Allied on a daily basis. The partnership has helped us stabilize cash flow to meet our everyday needs. Allied’s approach to factoring is both professional and helpful.” – Jennifer, CFO